Europeans Investigate Resale of AIDS Drugs

From CDC National Prevention Information Network

October 29, 2002

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Police and investigators from the Netherlands, Germany, Belgium and France are scheduled to meet today at Europol, Europe's police agency in the Hague, to exchange evidence about a wide web of trafficking schemes in which deeply discounted AIDS drugs meant for Africa were resold in Europe at huge profits. In addition, the European Commission is set to publish new enforcement guidelines Wednesday that it hopes will put an end to the smuggling. The investigations came to light this month after the discounted GlaxoSmithKline drugs Epivir and Combivir were intercepted at airports in Paris and Brussels.

People close to the investigations said the intercepted drugs were resold to several big, respected European importers. One of them, Kohlpharma, bought some of the drugs from a Dutch company called Asklepios, and paid fair market price for them, a company spokesperson said, adding that Kohlpharma had no idea the drugs had been discounted for use in Africa. The investigations resulted in two arrests last week: that of a German businessman working out of a garage near Bochum and of a French pharmaceuticals trader.

Dutch authorities are investigating Asklepios, a tiny import-export company run by a husband and wife out of their home, according to Raymond Salet, General Health Inspection Service spokesperson. The couple's attorney said the couple bought the drugs from yet another trader, not in Africa, and that the sale to Kohlpharma generated a profit of 2-20 percent of the medicine's value. One person close to the Dutch health authorities expressed concern that companies under investigation may have functioned like money launderers who move their transactions through several companies.

Some pharmaceutical companies were leery of discounting precisely because a two-tiered pricing system is such an easy target for fraud. Glaxo estimated it lost EUR16 million (US $15.75 million) in the last year from the drug reselling, a figure supported, said law enforcement officials, by shipping documents and invoices that investigators collected. "We can only continue this two-tier pricing if the diversion stops," said Glaxo official Chris Viehbacher. Glaxo is considering changing discounted drugs' labels, but that requires regulatory approval.

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